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Home My WebLink About97-01700 ~. " tJ l2 ~l !\ ~ I I .~ I .. I ~ ~ ~ :>... '" ~ 1 < ~ 1 \ \ \ " ..... ',,- It " \ \) , i 3 ! 2 / , 0 ,// , i ~ / 0 cJ ;:-- ~ ~ ~ ~I t"-I ~ . ~ COMMONWEALTH OF PENNSYLVANIA BY ATIORNEY GENERAL D. MICHAEL FISHER IN THE COURT OF COMMON PLEAS, CUMBERLAND COUNTY PENNSYLVANIA Plaintiff v. CIVIL ACTION - EQUITY KUHNS-HARNISH FORD, INC, 6320 CARLISLE PIKE MECHANICSBURG, PA 17055 1-{ Q'7 - \'l00 Respondent ASSURANCE OF VOLUNTARY COMPLIANCE WHEREAS, the Commonwealth of Pennsylvania, acting by Allorney General D, Michael Fisher, through the Bureau of Consumer Protection ("Commonwealth"), has caused an investigation to be made into the advertising and business practices of Kuhns-Harnish Ford, Inc" doing business as K&H Ford, Inc. ("Respondent"), pursuant to the Unfair Trade Practices and Consumer Protection Law, 73 P.S. ~~ 201-1-201-9.2 ("Consumer Protection Law"), the Automotive Industry Trade Practices Regulations, 37 Pa, Code ~~ 301.1-301.6 ("Auto Regs"), the Federal Truth in Lending Act, 15 U.S,C. ~ 1664, and the Federal Truth in Lending Regulation Z, 12 C,F,R. ~ 226.24; and WHEREAS, Respondent Kuhns-Harnish Ford, Inc" is a Delaware corporation engaged in trade or commerce within the Commonwealth through the operation of a motor vehicle dealership from a principal place of business located at 6320 Carlisle Pike, Mechanicsburg, Cumberland County, Pennsylvania 17055; and il , WHEREAS, the Respondent has cooperated fully with Ihe Commonwealth, providing copies of advertising for both radio and television campaigns which advertised Sale, Lease and Customer Option Plan (COP) financing; and WHEREAS, the Commonwealth issued a warning letter to the Respondent on March 19, 1993, concerning apparent violations of the Federal Truth in Lending Act, IS !i U.S.C, !i 1664, and Regulation Z, 12 C.F.R. !i 226.24. in the Respondent's advertisements. On February 3, 1994, the Commonwealth issued a warning letter to the Respondent concerning apparent violations of the Auto Regs, 37 Pa. Code !i 301,2(6), in the Respondent's advertisements; and WHEREAS, the Respondent ran a certain advertisement from September 1995 until February 1996, offering a Consumer Option Plan financing, a financing product of Ford Motor Credit, whereby consumers could purchase a new Ford Eddie Bauer F-150 4x4 truck by (COP) financing for forty-eight (48) months at less than two hundred and eighty-nine dollars ($289,00) a month if the consumer had one thousand dollars ($1,000,00) down or trade-in equivalent; and WHEREAS, the Commonwealth concludes that the radio advertisement was unclear in that it did not state that under one of the options available to customers under the plan; a "balloon" payment would be necessary at the end of the 48 monthly payments. WHEREAS, the Respondent ran this advertisement on television and on at least the following radio stations: WRVV, WKKL, WCMB, WYMJ, WTPA, WNCE, WRKZ, and WQXA. The radio transcript for this advertisement is attached hereto and incorporated herein as Exhibit A; and 2 WHEREAS, the Commonwealth has reviewed all of the other advertising copy provided by the Respondent; and WHEREAS, the Respondent's advertisemenls, including the radio COP advertisement, drew consumers to their business to purchase the vehicles as advertised; and WHEREAS, consumer Patrick Mann alleges Ihat he came to the Respondent's place of business after hearing the radio COP advertisement and that Respondent refused to sell him one of the advertised vehicles at the advertised terms; and WHEREAS, based upon its investigation, the Commonwealth alleges that the Respondent in its advertising of COP financed Eddie Bauer F-150 pick-up trucks has engaged in conduct violative of the Consumer Protection Law, Auto Regs, Truth in Lending Act, and Regulation Z as more specifically set forth below: 1. The Respondent's advertisement stated a period of monthly payments, an amount of monthly payment, and an amount of necessary down payment which ~ 226.24(c)(l) of Regulation Z has deemed to trigger the disclosures required by ~ 226.24(c)(2) of Regulalion Z, 2, The Respondent's radio advertisement failed to state an annual percentage rate, which the Commonwealth alleges to be a violation of ~ 1664(d)(4) of the Truth in Lending Act and ~ 226,24(c)(2)(iii) of Regulation Z, The Commonwealth concludes that this conduct falls within the scope of its correspondence March, 1993 to Respondent. 3, The Respondent advertised "owning" the advertised vehicle at certain payment terms, but failed to disclose Ihat a balloon payment was necessary at the end of the monthly 3 payments for consumers to actually own the vehicle, which the Commonweahh alleges to be a violation of ~ 201-3 of the Consumer Protection Law, as defined by ~ 201-2(4)(v) and (ix). 4, The Commonwealth alleges that the Respondent's refusal to sell an advertised vehicle at the advertised terms to consumer Mann violated ~ 301,2(4) of the Auto Regs, WHEREAS, the Respondent avers that it did not intentionally or wilfully or otherwise set out to violate the aforementioned statute or regulations, and that it desires to be in compliance with the laws of the Commonweahh and Regulation Z; and WHEREAS, under the Consumer Protection Law this Assurance of Voluntary Compliance shall not be considered an admission of wrongdoing for any purpose; and WHEREAS, this Assurance of Voluntary Compliance is accepted by the Commonweahh pursuant to ~201-5 of the Consumer Protection Law in lieu of commencing statutory proceedings under ~201-4. NOW THEREFORE, effective from the date of the signing of this Assurance of Voluntary Compliance, the Respondent agrees for itself, its successors, its assigns. agents, employees, and any and all other persons acting on its behalf through any corporate or business device as follows: I. The Respondent shall comply with all provisions of the Consumer Protection Law, Auto Regs, Federal Truth in Lending Act, and Regulation Z Ihat relate to advertising, and is permanently enjoined from any willful violation thereof. II. The Respondent shall ensure that any future COP advertisements which are similar to adverlisementthat is the subject of this Assurance contain all disclosures and terms 4 required by the aforementioned acts before it is utilized again in any medium, including but not limited to radio, television, newsprint, or the Internet, III. Upon signing this Assurance of Voluntary Compliance, the Respondent shall pay the Commonwealth the sum of $3 500 as costs of investigation to be used for future public protection purposes, IV, The Respondent agrees to offer consumer Patrick Mann a cash payment of $2.500, and in consideration of this payment Mr, Mann agrees to sign a release in regard to any claims related to the subject matter of this Assurance. Upon signing the Assurance, the Respondent shall remit to the Commonwealth the sum of $2.500 to be held in escrow pending Mr, Mann's execution of the release. In the event that Mr. Mann refuses to execute the release, the monies held by the Commonwealth will revert to the Respondent, V, All payments due and owing for the Assurance shall be made by certified check, cashier's check, attorney's check or money order, made payable to the Commonwealth of Pennsylvania, and forwarded to the Bureau of Consumer Protection, 132 Kline Village, Harrisburg, PA 17104. NOW THEREFORE, without the admission of any violation for any purpose, the Respondent agrees by the signing of this Assurance of Voluntary Compliance that it shall henceforth abide by each of the aforementioned provisions and that the breach of anyone of these terms of this Assurance of Voluntary Compliance shall be sufficient warrant for the Commonwealth of Pennsylvania to petition the Court of Common Pleas of Cumberland County to assess civil penalties under ~ 201-8(a) of the Consumer Protection Law and to order 5 any other equitable relief which Ihe Court deems necessary or proper, The Court shall maintain jurisdiction over the subject maIler of this Assurance of Voluntary Compliance and over the Respondent for the purpose of enforcing this Assurance. This Assurance of Voluntary Compliance shall have the same force and effect of a Permanent Injunction issued pursuant to ~ 201-4 of the Consumer Protection Law, Provided, however, that nothing in this Assurance of Voluntary Compliance shall be construed to waive or limit any right of action against the Respondent by any consumer, or by any local, state, federal or other governmental entity, except for the Commonwealth of Pennsylvania, acting by the Office of AIlorney General, Bureau of Consumer Protection, in regard to the matters included in this Assurance, Witness this 2S-~ day of March, 1997 FOR THE PLAINTIFF: BY: D MICHAEL FISHER BY: D, MICHAEL FISHER ATIORNEY GENERAL \4 EW S APPLE CHIEF EXECUT E OFFICER KUHNS-HARNISH FORD, INC. RESPONDENT BY: JOSEPH K. GOLDBERG JOSEPH K. GOLDBERG CHIEF DEPUTY ATIORNEY GENERAL BY:~~~ JODI L. FLlTION DEPUTY ATIORNEY GENERAL ATIORNEY I.D. NO. 58131 BY: DA VID A, FITZSIMONS, ESQ, METIE, EVANS & WOODSIDE 3401 N. FRONT STREET P.O, BOX 5950 HARRISBURG, PA 17110-0950 ATIORNEY FOR RESPONDENT 6 EXHIBIT A 9-9-1995 EDDIE BAUER F- SERIES 4x4 K & H FORD: RADIO SCRIPT If i I I, I ! I ! ; I (Voice 'l male in IMAGINE..yourself Up.. With VB power..air conditioning,.and all dressed up in the special Eddie Bauer Appearance package...with two-tone paint and forged Aluminum Wheels... a quiet reasonable tone) in a NEW '96..Full size,,4-Wheel Drive..Ford Pick- (Voice '2) IMAGINE..The convenience of Speed Control..Tilt Steering..Power Locks and Windows..an integrated Cab Step..and Sliding Rear Window. (Voice 11) Then IMAGINE..an electronic sound system with a cassette player..bright electric mirrors..an interior light group and a five speed overdrive transmission. . (Voice '2) NOW Imagine..OWNING..this loaded 4-wheel drive pick-up with payments under two-eighty-nine a.month. Well..don't imagine any 10nger..K & H Ford can make it a realty. (Voice 11) With the customer option plan you can finance this 4-wheeler for forty-eight months and your payment will be less than two-eighty-nine a month. --With your superior credit..all you need is ONE thousand dollars cash or trade equivalent. (Voice '2) Extra shipments of these Eddie Bauer 4-wheelers will insure you of great selection during this exclusive offer, So for the TRUCK and the DEAL that can't be best..come to K & H Ford.. (Voice 11) ..K & H will include a die-cast scale model of a Ford Pick-up when you I take delivery of your Eddie Bauer 4 by 4.,. 't=~_. Th., '. · · H F.,... On 'h. O.d" 1. m.. .M..h.n' .'h..... I : , , r-------- ~ d ~ ... ~ V> (l ~ ~ " ,... ~ ~I ~ 19 3 '.!J .- i " e: ~ <J <.J 1r. 1/) '- 1- \(J 0- u;. ~- .9 .... ;.",: If) .'" N .:J-<f' t- o ~ rf) (~~{! ....... ~ r'j.1 \.0 0 ~r.; Q.. r"'~ <J \!) . '5- r ' "I .;''I.t) l{) -;; CL 11. C. I ;!" ::r j :..:..Jt" C'.:.. ' J_ vt <i. u: ~I- 1:.'uJ <J ~ ,.)U- F: -'l :.:: tL r- .J 0 C1' Ll